Earnings per share EPS

Question 1

what type of entities should report an EPS ?

Answer 1

All public entities that trading their stocks on the stock exchange must present EPS on the face of the financial statement

if the entity has a simple capital structure ( only common stock or non convertible common stock ) they need to present only EPS but if the capital structure is not simple including convertible preferred stock or other form of common shares increasing agreement they need to present both Basic and diluted EPS on their financial statement.

The common shares are only dilute if it reduces the EPS

Question 2

How to calculate basic EPS ?

Answer 2

Income available for common shareholders

/ Weighted average outstanding common shares

Question 3

How to calculate income available for common shareholders ?

Answer 3

income - declared dividens for noncumulative preferred stocks - declared dividens for cumulative preferred stock whether its paid or not

Question 4

How to calculate Weighted average outstanding common stock WASCO ?

Answer 4

=common shares outstanding in the beginning of the period
+Common shares issued during the period ( weighted Average )
+Stock splits (Retroactive adjustment Assume from the beginning )
+Stock dividn ( Retroactive adjustment assume from the beginning )
-Common shares reacquired during the period ( weighted average )
=Ending Common shares outstanding